Predatory lenders exist in the SME space just like the payday personal lenders. The risk is the less scrupulous operators will spoil an exciting new source of SME funding. American small business borrowers now have a Bill of Rights which will afford significant protection from predatory lenders. US lenders which join the Responsible Business lending Coaltion commit to ensuring borrowers’ rights as follows:

1. The right to transparent pricing and terms, including a right to see an annualised interest rate and all fees.
2. The right to non-abusive products, so that borrowers don’t get trapped in a vicious cycle of expensive re-borrowing.
3. The right to responsible underwriting, so that borrowers are not placed in loans they are unable to repay.
4. The right to fair treatment from brokers, so that borrowers are not steered into the most expensive loans.
5. The right to inclusive credit access, without discrimination.
6. The right to fair collection practices, to prevent harassment and unfair treatment.

Small business owners in other countries also need and deserve such protection. We are calling on Australian SME lenders and other stakeholders to learn from the US experience and form a coalition to establish a small business borrowers’ Bill of Rights for Australian SMEs.

About the Author

The Australian Business Loan System is a disgrace.
There should be a percentage tax on banks nett profit which should be used to fund a similar system to the Americans whereby businesses that meet certain criteria should be funded dollar for dollar or whatever percentage based on a list of criteria to be determined.

Make it 5% but let’s play with 1%. That means that every year there is a pool of approx $1billion in financing which is replenshed annualy.

Assuming as per America that 1% of these loans fail, hey let’s take it to 5% after all this is Australia, can you imagine the grwoth to our economy.
Yes theres a management fee = hooray anothner beurocratic entity where a big sum is piddled away, but more imprtantly there is some breathing space for businesses who have passed the credentials whilst being asphyxiated by our current main source of capital.the banks who are not only totally risk averse in this section but whose demands are tantamount to predatory.

If one has sold theior property to fund their business and the balance sheet has been tidied up and by the way the shareholders or owners are at risk of losing everything and a bridging loan is needed …. NO FIXED ASSETS …. … don’t waste ones time asking the banks.

So the rich get richer and the battlers and salt of the eart people trying their hardest, manage to get finance by cash flow lenders at 25% whereas if you had a mortgable interest in a residence can get capital at under 7%.
I’m not talking of businesses that have a financial history of losees but businesses who have a history of sustainability and some sort of growth.

The Government of the day has to make funding availability possible.
THINK ABOUT IT.